PLASCOM INDUSTRIES LLP,KOLKATA vs THE INCOME TAX OFFICER, WARD-1(3), GUWAHATI

Income Tax Appellate Tribunal, “GUWAHATI BENCH”, GUWAHATI

Hearing: 10.02.2026Pronounced: 02.03.2026

IN THE INCOME TAX APPELLATE TRIBUNAL “GUWAHATI BENCH”, GUWAHATI (VIRTUAL HEARING AT KOLKATA) SHRI GEORGE MATHAN, JUDICIAL MEMBER SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER

ITA No. 280/GTY/2025 Assessment Year : 2023-24

Plascom Industries LLP, Vs. ITO, Ward-1(3), Guwahati, BE 77, Sector 1, Salt Lake City, Aayakar Bhawan, Kolkata - 700064 Christian Basti, G.S. Road, [PAN: AATFP2399A] Guwahati - 781005 APPELLANT RESPONDENT

Assessee by : S.M. Surana, Advocate Revenue by : Sanjay Jha, JCIT

Date of hearing : 10.02.2026 Date of Pronouncement : 02.03.2026

O R D E R PER LAXMI PRASAD SAHU, ACCOUNTANT MEMBER This is an appeal filed by the assessee against the order passed u/s 250 of the Income Tax Act, 1961 (hereafter “the Act”) by the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereafter “the Ld. CIT(A)] dated 22.07.2025, DIN & order No. ITBA/NFAC/S/250/2025-26/ 1078777515(1) as per the grounds raised by the assessee after going through the grounds, the substantive grievance raised by the assessee is the deduction was not granted to the assessee by the revenue authorities u/s 80IE of the Act.

2 ITA No. 280/GTY/2025 Plascom Industries LLP 2. Briefly stated the facts of the case are that the assessee filed its ITR as per the provision of section of 139(1) of the Act on 16.10.2023 declaring total income at Rs. 3,69,890/-. The case was selected for scrutiny under CASS for the following reasons:

(i) High related party transactions and undertaking claiming deduction u/s 80IA/80IC etc.

Accordingly, notice was issued to the assessee. Subsequently, other statutory notices were issued to the assessee and assessee furnished reply in support of questionnaire issued by the AO. During the course of assessment proceedings, the AO obtained information after exercising power u/s 133(6) of the Act, certain purchase parties to verify the purchase claimed by the assessee of the relevant assessment year. Further, as per notice u/s 142(1) of the Act dated 22.02.2025, the assessee was asked to give justification so as to prove that it fulfils all the conditions given u/s 80IE of the Act and the assessee qualify for the said deduction along with supporting documentary evidences. However, the assessee did not provide to the following details and documents:

“3.4 Upon reviewing the submissions and documents provided by the assessee, the following variations are proposed based on the findings of the assessment: a) Vide notice u/s. 142(1) of the I.T Act dated 22.02.2025, the assessee was asked to give justification so as to prove that it fulfils all the conditions given u/s 801E of the I.T Act and the assessee qualifies for the said deduction along with supporting documentary evidence. However, the assessee has not provided following details and/or documents. i) The assessee has not submitted documentary evidence to prove that it produces or manufacture eligible articles/ or thing. IEM from DIPP do not show that your product is eligible for deduction u/s 801E ii) The assessee has not given explanation and supporting documentary evidence to prove that the assessee fulfils the condition given u/s 801E(3) of the I.T Act. iii) The assessee has also not given explanation/write-up/justification and supporting evidence to show that provisions u/s.801E(4) of the I.T Act do not hit its claim of deduction u/s 80IE of the 1.T Act.

3 ITA No. 280/GTY/2025 Plascom Industries LLP iv) The assessee has also not given explanation/write-up/justification and supporting evidence to show that the provisions u/s 801E(5) of the IT Act do not hit its claim of deduction u/s, 801E of the I.T Act. In view of the above, kindly explain as to why it should not be held that you do not fulfill all the conditions mentioned u/s.80IE of the I.T. Act and accordingly your claim of deduction u/s.801E of the I.T. Act amounting to Rs.6,35,35,087/- should not be rejected and brought to tax. Please ensure that your reply should be presented systematically and with supporting documentary evidence b) The assessee has submitted statement of purchase and sale of goods to related parties in given format. However, the assessee has not submitted any justification to show that said transactions are comparable with similar transactions with unrelated parties in the market with assessee firm along with supporting details and documents. Therefore, please explain as to why 10% of Rs 24,40,20,802/- le. Rs.2,44,02,080/- should not be disallowed as over valuation of sales and undervaluation of purchase from related parties transactions and reduced from the claim for deduction u/s.801E of the IT Act and taxed as regular income as per provisions of section 801E(6) r.w.s. 801A(8) of the IT Act. c) Further, it is also seen from the statement of related party transaction that the assessee firm has taken loan of Rs.1,86,08,294/- from partner Shri Mahendra Kumar Agarwal. However, as per Profit & Loss a/c no interest has been debited as interest expenses and credited to Partners Capital A/c. Therefore, please explain as to why it should not be held that you have not paid interest to inflate the exempt profit and accordingly please explain as to why your claim of deduction u/s.801E be reduced by Rs.22,32,995/- being under valuation of loan taken je 12% of Rs.1,86,08,294/-(unpaid interest to partner) and said amount should not be brought to tax as normal income as per provisions of section 801E(6) r.w.s. 801A(8) of the IT Act d) During the course of assessment proceedings, notice u/s 133(6) was issued to few parties. It is noted that the following party has not responded to the notice. In view of the non-compliance, the transactions with the following parties remain unsubstantiated.

SI. Name Y/N No.

1 SHIV POLYMERS NO INDUSTRIES

It is therefore, requested to furnish i) Complete details in respect of the services rendered by this party with documentary proof, ii) Copy of agreement entered into between the assessee and this party

4 ITA No. 280/GTY/2025 Plascom Industries LLP iii) Copy of ledger account. Please note that in the absence of the complete documents establishing the above transactions, adverse inference will be drawn. e) In response the notice issued u/s. 133(6), the transaction in respect of the following parties are not matching with the details filed by you.

SI. Name Y/N No.

1 ANUP GARG & OTHERS reco (HUF)

2 ASSAM INDUSTRIAL reco INFRASTRCTURE DEVELOPMENT CORPORATION

3 BDG SHANTI POLYPACK reco PRIVATE LIMITED

A copy of the ledger account submitted by these parties are enclosed. You are, therefore, requested to reconcile. Please note that the reconciliation should be backed with documentary proof. Else, adverse inference will be drawn The assessee accordingly, was requested to show cause why the assessment should not be finalized on the above lines and initiate penalty as applicable as per the provisions of the Act. Further, the assessee was also provided an opportunity of personal hearing through VC. Further, the assessee was also provided an opportunity of personal hearing through VC on his request. However, the assessee did not attend the Video conference (VC), scheduled on 12.03.2025, nor the assessee sought any adjournment.” 4. Accordingly, the AO proposed to disallow the deduction claimed u/s 80IE of the Act for Rs. 63535087/-. Further, during the course of examination of the documents, it was noticed that during the impugned assessment year, the assessee had purchased and sold of goods to related parties. However, the assessee was not submitted for any justification to show that the said transactions are comparable with similar transaction with unrelated parties in the market along with supporting details and documents, therefore, 10% of the total at Rs.

5 ITA No. 280/GTY/2025 Plascom Industries LLP 24,40,20,802/- i.e. Rs. 2,44,02,080/- was proposed to be added back and reduced from the deduction claimed u/s 80IE of the Act towards undervaluation of purchase & sales from unrelated parties.

Further, it was observed that the assessee has taken loan of Rs. 1,86,08,294/- from partner Mr. Mahendra Kumar Agarwal and from the Profit & Loss Account it was observed that the assessee is not debited any interest as interest expenses and not credited to partner’s capital account. Therefore, the AO computed the interest expenses @ 12% at Rs. 1,86,08,294/- which comes to Rs. 22,32,995/- and this amount was treated as income was proposed to be disallowed as per section 80IE(6) r.w.s. 80IA(8) of the Act and show cause notice was issued to the assessee against the show cause notice, the assessee filed reply on 13.03.2025 explaining the reason for eligibility of deduction u/s 80IE of the Act with documentary evidences . The AO after considering the entire submissions/reply/documents furnished by the assessee. He assessed the total income at Rs. 6,39,04,980/- and completed the assessment order on 21.03.2025 u/s 143(3) r.w.s. 144B of the Act.

Aggrieved from the above order, the assessee instituted appeal on 14.04.2025 before the Ld. CIT(A) after filing of appeal by the assessee. The Ld. CIT(A) provided adequate opportunity of hearing to substantiate its grievance and case was fixed for hearing on different dates but there was no any response from the assessee side and he observed in Para No. 7.2.2 as under:

“At the appellate stage, the assessee is not filed a single document or clarification to rebut the detailed finding of the AO. The assessee has completely failed to discharge the onus of proof that lay upon it, specially when claiming a large deduction under a specific incentive provision like section 80IE. The silence and inaction of the assessee further affirm the correctness of the AO’s conclusions.”

6 ITA No. 280/GTY/2025 Plascom Industries LLP 7. Aggrieved from the order of the Ld. CIT(A), the assessee filed appeal before the ITAT.

Since the learned CIT(A)NFAC has not decided the issue on merits and dismissed the appeal only for non-complying the notices by the assessee. On going through the Order of the AO and paper books filed by the assessee we noted that in this case no further investigations are required in the facts of the case as observed from the Assessment Order and Paper Books filed by the assessee. Accordingly, we rely on the judgment of Hon’ble High Court of Orissa in the case of Orissa H.C.Shikha O Anusandhan Vs. CIT reported in 336 ITR 112 in which it has been held as “law is well settled once the materials available on record, the appellate court should have disposed off the case on merits. Taking those materials into consideration and there is no need to direct remand. Respectfully following above judgment now, we are taking up this appeal for adjudication on merits.

The Ld. Counsel for the assessee reiterated the submissions made before the lower authorities and submitted that during the assessment proceedings, the assessee complied all the notices issued by the AO and the assessee is eligible for claim of deduction u/s 80IE of the Act and submitted that this is not the first year of the business the first year of business is year 2017-18 which was examined in scrutiny assessment and the assessee has complied the preliminary requirement to eligibility of deduction u/s 80IE of the Act and no adverse view was taken by the then AO. He further submitted that for AY 2017-18 was assessed u/s 143(3) of the Act by the ITO, W- 1(1), Guwahati, order dated 23.12.2019, Order No. ITBA/AST/S/143(3)/2019-20/1022933659(1) where the entire details were furnished and the AO has examined, since from the first year AY 2017-18 to 2020-21, there was no income, therefore, no deduction was claimed by the assessee and for the subsequent

7 ITA No. 280/GTY/2025 Plascom Industries LLP assessment years the deduction has been allowed to the assessee while processing the return of income u/s 143(1)(a) of the Act and necessary computation of income were filed in which specific claim was mentioned during the assessment u/s 143(3) of the Act. He further submitted that once the claim of the exemption is exceeded no further disallowance made for the subsequent years till the eligibility period and he relied on the case laws in support of his arguments. He filed written synopsis which is as under:

“The assessee is new industrial undertaking established and started production in assessment year 2017-18. There were losses in first year and following years up to assessment year 2021-22. The taxable income first arose in AY 2022-23 where claim of deduction u/s 80IE was made and was allowed u/s 143(1). In AY 2023-24, in second year deduction u/s 80IE was also claimed. In scrutiny assessment. the various details called for were filed. The Ld. AO finally declined to allow exemption u/s 801E on the following grounds. - Vide 1 para page 9 of the assessment order the only ground for disallowance was that the assessee failed to prove that it fulfilled the conditions laid down u/s 80IE (3) 801E (4) and 801E (5) of the Income tax Act 1961. The assessee disputed the action of the Ld. AO before Ld. CIT(A). The Ld. CTT(A) fixed up the appeal for hearing on three occasions but on none of the occasion clear 7 days' time was allowed to respond. No real time alert was given to the assessee. The appeal was also fixed up within a period of two months only. Thus, the assessee did not receive the notices nor proper time was granted in each of the notice. The assessee therefore could not comply with the notices of the Ed. CIT(A). The Ld. CIT(A) decided the appeal on merits after going through the facts on record and confirmed the action of the AO on the ground that provisions of sec 80E (3), 801E (4) and 801E (5) is not complied with. It is submitted that the assessee fulfilled the conditions laid down under above three sub-sections were on record. The said is explained as under- 80-IE... "(3) This section applies to any undertaking which fulfils all the following conditions, namely (i) it is not formed by splitting up, or the reconstruction, of a business already in existence: Provided that this condition shall not apply in respect of an undertaking which is formed as a result of the re-establishment, reconstruction or revival by the assessee of the business of any such undertaking as referred to in section 33B, in the circumstances and within the period specified in the said section; (ii) it is

8 ITA No. 280/GTY/2025 Plascom Industries LLP not formed by the transfer to a new business of machinery or plant previously used for any purpose. Explanation. The provisions of Explanations 1 and 2 to sub-section (3) of section 80-1A shall apply for the purposes of clause (ii) of this sub-section as they apply for the purposes of clause (ii) of that sub-section." The condition therefore is that the industry should be new and is not formed by splitting up or the reconstruction, of a business already in existence: It is submitted that first year of the business and production was AY 2017-18. The assessment for this year was taken up for scrutiny. The Ld AO made number of requisitions in the said assessment by issue of notice u/s 142(1) and also in the course of hearing. The assessee filed the following details and evidences in support of the return on 5.12.2019 (vie paper book page 75). (i) Industry registration certificate (ii) Factory licence (iii) Trade license (iv) Electricity power installation certificate (v) Pollution Control Board Certificate (vi) Details of purchase of Plant and Machinery (All new) (vii) Factory building and land acquisitions certificate (the land was acquired from Assam Government Industrial (vii) NOC from Local authority (ix) Certificate of date of commencement of production. (x) Copy of approval, licensing and registration of factory from Chief Inspector of Factories (xi) Raw material purchase details (xii) Production capacity certificate (xiii) Nature of industry The assessee was also registered as new industry in Excise, GST/VAT/Service tax the documents of which were also filed in the course of hearing for the assessment year 2017-18 and were also part of the TAR. The copy of the same is also part of the paper book.

9 ITA No. 280/GTY/2025 Plascom Industries LLP Whether the industry is established by splitting or reconstruction is measured from the plant and machinery installed by the assessee. In the course of assessment proceeding the Ld. AO asked for details of purchase of plant and machinery since the assessee claimed depreciation as well as additional depreciation as can be seen from the computation of income vide paper book page 1 wherein the assessee claimed depreciation of Rs. 2,17,12,594/- (including additional depreciation of Rs.1,16,97,047/- vide copy of return at paper book page27) and business loss of Rs 5,97,371/. The assessee duly filed the same. These were required by the Ld. AO because the assessee claimed additional depreciation on all the machineries installed during the year. The provision of additional depreciation as per sec 32 is as under- See "32 (iia) in the case of any now machinery or plant (other than ships and aircraft), which has been acquired and installed after the 31st day of March, 2005, by an assessee engaged in the business of manufacture or production of any article or thing or in the business of generation, transmission or distribution of power, a further sum equal to twenty per cent of the actual cost of such machinery or plant shall be allowed as deduction under clause (ii) Provided that where an assessee, sets up an undertaking or enterprise for manufacture of production of any article or thing, on or after the 1st day of April, 2015 in any backward area notified by the Central Government in this behalf, in the State of Andhra Pradesh or in the State of Bihar or in the State of Telangana or in the State of West Bengal, and acquires and installs any new machinery or plant (other than ships and aircraft) for the purposes of the said undertaking or enterprise during the period beginning on the 1st day of April, 2015 and ending before the 1st day of April, 2020 in the said backward area, then, the provisions of clause (iia) shall have effect, as if for the words "twenty per cent", the words "thirty-five per cent" had been substituted: Provided further that no deduction shall be allowed in respect of (A) any machinery or plant which, before its installation by the assessee, was used either within or outside India by any other person, or (B) any machinery or plant installed in any office premises or any residential accommodation, including accommodation in the nature of a guest-house; or (C) any office appliances or road transport vehicles, or (D) any machinery or plant, the whole of the actual cost of which is allowed as a deduction (whether by way of depreciation or otherwise) in computing the income chargeable under the head "Profits and gains of business or profession of any one previous year, It can thus be seen that additional depreciation can be claimed and allowed only when new machinery or plant is installed. The Id AO has allowed additional depreciation after verification as can be seen form the assessment order u/s

10 ITA No. 280/GTY/2025 Plascom Industries LLP 143(3) wherein the total business loss as determined is at Rs 5,97,371/- and depreciation as claimed and allowed is Rs. 2,17,12,594/- Thus, fulfilment of conditions laid down u/s 80IE (3) of the income tax Act 1961 is proved form the facts on record As regard sec 80IE: (4) the provision is as under- "(4) Notwithstanding anything contained in any other provision of this Act, in computing the total income of the assessee, no deduction shall be allowed under any other section contained in Chapter VIA or in section 10A or section 10AA or section 10B or section 10BA, in relation to the profits and gains of the undertaking." It was also on record that no other deduction was ever claimed in any of the years nor allowed. It was on record that there were losses in all years upto AY. 2021-22. The copy of computation and acknowledgement of the return for AY 2018-19 to 2021-22 is annexed in the paper book. Thus, it was available on records that no deduction in violation of sec 801E (4) was ever claimed and allowed. In fact, even though there was no profit in earlier years upto 2021-22 yet the assessee specifically stated that he is covered u/s 80IE as can be seen from computation of income for each year vide paper book. As regard see 80IE (5) the provision is as under (5) Notwithstanding anything contained in this Act, no deduction shall be allowed to any undertaking under this section, where the total period of deduction inclusive of the period of deduction under this section, or under section 80-1C or under the second proviso to sub section (4) of section 80-1B or under section 10C, as the case may be, exceeds ten assessment years. It can be seen that AY 2023-24 is 70 year of production. Thus, there is no violation of sec 801E (5) since, first year has been defined in sec 80IE (7) which is as under (7) For the purposes of this section, (1) "initial assessment year" means the assessment year relevant to the previous year in which the undertaking begins to manufacture or produce articles or things, or completes substantial expansion; It is to be noted that in first year there was no income so as to claim deduction u/s 801E. The initial year where deduction was allowed was assessment year 2022-23. Therefore, deduction cannot be disallowed in subsequent year. Reference can be made to the judgement of Honble Gujarat High Court in the case of Saurashtra Cement & Chemicals Industries Lid 123 ITR 669 (Guj.) MP High court in Bhilai Engineering Corpa P Ltd., 133 ITR page 687 and that of Hon'ble Bombay High Court in the case of Western Outdoor Interactive P 1.td 349 ITR 309 (Bom) The aforesaid judgements have been followed by Patna Bench of ITAT in LTA. Nos. 85 & 86/Pat/2017 in the case of Rakesh Kumar Vs. DCIT ACTT, Circle 23.07.2024.

11 ITA No. 280/GTY/2025 Plascom Industries LLP Hence even otherwise also assessee is entitled to deduction u/s 80IE.” 9. He further submitted that in respect of other additions the AO has wrongly computed for making addition which is not tenable as per in the eyes of law.

10.

On the other hand, the Ld. DR relied on the order of lower authorities and submitted that for AY 2017-18 there is no any deduction claimed by the assessee in any subsequent assessment years there was no any scrutiny assessment was done by the department. Therefore, the correctness of the claim cannot be accepted. He further submitted that during the appellate proceedings, the assessee did not represent its case.

11.

Considering the rival submissions and perusing the entire material available on record and the orders of authorities below. We noted that the order of Ld. CIT(A) is exparte order for not compliance by the assessee side the Ld. CIT(A) confirmed the order of the AO and after going through the assessment order, we noted that the AO has dealt the issue completely on the facts of the case since and assessee also replied the SCN , the Ld. CIT(A) has not decided the issue on merits and dismissed the appeal of the assessee, merely confirming the order of AO. On going through the order of the AO and paper books filed by the assessee containing page No. 1 to 259 which is placed on record. The entire documents were filed before the ld. CIT(A) & AO as per the certification by the assessee.

12.

Heard both the parties, the main dispute raised by the assessee is not allowing deduction u/s 80IE of the Act whereas as per the written submissions and argument put forth by the Ld. Counsel for the assessee that the assessee has fulfilled the entire conditions laid down for eligibility of deduction u/s 80IE of the Act. During the assessment proceedings, the assessee furnished reply documents in support of its claim. In the initial assessment years and subsequent assessment years

12 ITA No. 280/GTY/2025 Plascom Industries LLP from AY 2017-18 to 2021-22. There was a loss, therefore, there was no claim made by the assessee in its return of income separately and there was a scrutiny assessment was made for the AY 2017-18 which is initial assessment year and the AO has accepted the purchase/ sales, therefore, there is no doubt that it is the first year of the eligibility. The activity of the assessee is engage in the manufacturing activity carried out by the assessee which is eligible for deduction u/s 80IE of the Act and we noted from the submission of the assessee that the assessee has satisfied the conditions laid down for eligibility for deduction u/s 80IE(7) of the Act. Therefore, the deduction cannot be denied to the assessee, case laws relied on by the Ld. Counsel supports the case of the assessee noted (supra). Further, the AO has made other two additions towards ALP and notional interest expenditure, these two additions are also in favour of the assessee by Circular No. 37/2016, dated 02.11.2016, therefore, these two additions made by the AO towards ALP and interest expenditure are also part of the business profit and eligible for deduction u/s 80IE of the Act.

13.

In the result, appeal of the assessee is allowed.

Order pronounced on 02.03.2026

Sd/- Sd/- (George Mathan) (Laxmi Prasad Sahu) Judicial Member Accountant Member

Dated: 02.03.2026 AK, Sr. P.S.

13 ITA No. 280/GTY/2025 Plascom Industries LLP Copy of the order forwarded to: 1. Appellant 2. Respondent 3. Pr. CIT 4. CIT(A) 5. CIT(DR)

//True copy// By order

Assistant Registrar, Kolkata Benches

PLASCOM INDUSTRIES LLP,KOLKATA vs. THE INCOME TAX OFFICER, WARD-1(3), GUWAHATI